MUMBAI, March 15 (PTI): Benchmark BSE Sensex pared its early gains to close down by 344 points at a five-month low while Nifty slid below the 17,000 level on Wednesday due to selling in banking, financial and telecom stocks.
Persistent foreign capital drain from the domestic market and lingering concerns over banks’ health and high inflation dented market sentiment, traders said.
Falling for the fifth straight session, the 30-share BSE Sensex closed lower by 344.29 points or 0.59 per cent at 57,555.90 with 21 of its stocks ending in the red. After a gap up opening, the index surged over 570 points to touch a high of 58,473.63 amid positive Asian markets in early trade.
The stock markets, however, lost steam after a weak opening of European stocks which retreated on fears that the European Central Bank may hike rates by 25 basis points.
The Sensex tanked more than 1,000 points from the day’s high to hit a low of 57,455.67.
Marking its fifth straight day of losses, the broader NSE Nifty declined 71.15 points or 0.42 per cent to end at 16,972.15, with 28 of its stocks ending with losses.
IndusInd Bank was the biggest loser in the Sensex pack, shedding nearly 2 per cent, followed by Bharti Airtel, Reliance Industries, HDFC twins, SBI, HUL, Tata Motors, Nestle India and Axis Bank.
On the other hand, Asian Paints, Tata Steel, Titan and L&T were among the gainers, rising up to 3.03 per cent.
“Domestic gains were short-lived, as European markets fell on fears that the ECB would raise interest rates by at least 25 bps at its meeting on Thursday. High-interest rate is the worry of the stock market,” said Vinod Nair, Head of Research at Geojit Financial Services.
Globally, investors remain cautious ahead of the upcoming central bank meeting, although some relief was seen after the US government’s intervention to ease fears regarding the ongoing banking crisis, coupled with the inline CPI inflation numbers, said Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services Ltd.
Meanwhile, the US annual inflation declined to 6 per cent in February from 6.4 per cent in January, which triggered speculation that the US Fed might be less aggressive in raising interest rates.
Among sectoral indices, telecom declined by 1.20 per cent, bankex fell by 0.86 per cent, financial services by 0.81 per cent, realty by 0.69 per cent, teck by 0.54 per cent, and auto by 0.45 per cent.
In contrast, power, metal and consumer durables were among those closing in the green.
The in-line data showing a decline in US inflation provided a gap-up opening in context with the global relief rally, bringing confidence that the Fed would not opt for a harsh rate hike following the turmoil in the banking sector. Broader rate hike expectation has reduced from 50bps to 25bps and there are possibilities that the Fed may even consider not hiking the rates in the March policy meeting, Nair said.
“Nifty fell for the fifth consecutive session on March 15 as worries over banking contagion in the developed world continued to hurt sentiments…An uneasy calm fell on world markets on Wednesday, with efforts by regulators and financial executives to ease contagion fears sparked by the collapse of Banks in the US improving sentiments though investors seemed not sure about how long will this last,” said Deepak Jasani, Head of Retail Research, HDFC Securities.
India’s exports dipped in February for the third consecutive month by 8.8 per cent to USD 33.88 billion against USD 37.15 billion in the same month last year, according to the data released by the commerce ministry on Wednesday.
Imports also declined by 8.21 per cent to USD 51.31 billion as against USD 55.9 billion recorded in the corresponding month last year.
In Asian markets, Shanghai, Tokyo, Hong Kong and Seoul ended in the green.
However, European equity markets were trading with significant losses in the afternoon trade. Major indices on Wall Street settled higher in the overnight trade.
Meanwhile, the rupee declined 25 paise to close at 82.62 against the US dollar on Wednesday. International oil benchmark Brent crude gained 0.72 per cent to USD 78.01 per barrel.
Foreign portfolio investors (FPIs) offloaded shares worth Rs 3,086.96 crore on Tuesday, according to exchange data.